Q 82-1
(a) Which principle is embodied in Article 82(1) CISG?
(b) Compare Article 82(1) with Article 7.3.6(1) and (2) PICC 2016 as well as with Article 207 OR and Article 1647 CC and describe the differences in relation to Article 82 CISG.
(a) Article 82(1) CISG embodies the principle of restitution of the goods in an unimpaired condition.
(b) The provisions of the PICC and the CC do not bar the buyer from avoiding the contract where it is unable to return the goods. Article 207 OR is similar to the CISG but bars avoidance only where the buyer destroyed the goods or sold or transformed them.
Q 82-2
How is the principle established in Article 82(1) CISG ‘watered down’? See Article 82(2) CISG.
Article 82(2) CISG enshrines three exceptions of great practical importance: for the purposes of determining the buyer’s ability to declare the contract avoided, the seller bears the risk of loss or deterioration of the goods where those are due to the seller’s breach of contract, but also where they are due to casualty or force majeure, or where the goods were consumed or transformed in the normal course of use or resold in the normal course of business.
Q 82-3
(a) To what extent does Article 82(2) CISG provide for a particular risk allocation mechanism to govern the situation after the contract has been declared avoided?
(b) What is the idea underlying Article 82(2) CISG?
(a) After avoidance of the contract, the seller bears the risk of (fortuitous) loss, deterioration, alteration or consummation of the goods although the seller has performed its obligation to deliver. Article 82(2) is thus deviating from the general rules on the passing of risk (Arts 67–69 CISG), according to which the buyer normally bears the risk once the goods have been delivered.
(b) The idea is to shift the risk of loss or deterioration of the goods that had passed to the buyer in conformity with Articles 67 to 69 CISG back to the seller; this is justified in those cases where the contract is avoided because of a breach of contract on behalf of the seller.
Q 82-4
(a) Why was the buyer allowed to declare the contract avoided in C 82-1?
(b) According to the court, does it matter at what point in time the alienation of the goods, consequent upon an examination within the meaning of Article 38 CISG, takes place?
(a) Because the goods deteriorated during their examination according to Article 38 CISG. The fact that the buyer processed the entirety of the goods did not bar the buyer from declaring avoidance because the defects in the goods became apparent only in the course of processing.
(b) No. The decisive point was the reason for which the goods were altered, that is, the fact that the goods were altered in order to comply with the examination duty of Article 38 CISG.
Q 82-5
It has been disputed whether Article 82 CISG should apply only where it is the buyer who declares avoidance, or whether it should also apply where the contract is terminated by mutual agreement or (unilaterally) by the seller. What do you think? It will be helpful to consider which party should be protected by Article 82 CISG.
Article 82 CISG is specially tailored to the case where the buyer is entitled to declare the contract avoided as a result of a breach of contract by the seller, with the consequence that risk of loss or deterioration of the goods is completely borne by the seller. Where it is the seller who has the right to terminate the contract, the application of Article 82 would mean that the seller would not be able to exercise its right to avoid whenever the goods had deteriorated or were lost. The application of Article 82 would thus ‘punish’ the seller although it is not the seller who is in breach of contract but rather the buyer. In order to avoid such an unreasonable result, Article 82 should be limited to the case where it is the buyer who declares avoidance.
In case of consensual avoidance, the application of Article 82 CISG should depend on the reasons for which the contract was mutually terminated, that is, it only should apply if it was the seller who gave reason to the mutual termination.
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